News of luxury’s demise has been greatly exaggerated

Walpole CEO Helen Brocklebank on why the luxury sector's post-revenge spending re-balance should not be interpreted as a downturn

Towards the end of last year, there seemed to be a flurry of news stories about a downturn in luxury. Much of these were sparked by 酩悦·轩尼诗-路易·威登集团 , the world’s largest luxury conglomerate (and our continent's first half trillion-dollar enterprise) reporting a 7% drop in its share price (in the region of $150 billion). FARFETCH was also in the news, and MATCHES was sold to Mike Ashley for just over ￡50 million, a fraction of what Apax Partners paid for the retailer only six years ago. Even Burberry , the FTSE 100 British luxury super brand, has been the subject of speculation after it revised its forecast of its operating profits.?

And yet….

Whilst it’s true that things are slower for luxury compared to the annus mirabilis of 2022 which saw global luxury growth of more than 20%, this current climate is very much not a downturn, but a normalisation. 贝恩公司 ’s recent?Altagamma luxury monitor study?has forecast 2023’s growth at around 9%, on a par with the annual growth that the British luxury sector was seeing pre-pandemic. Bain references the headwinds of the end of last year caused by a more “fragile consumer confidence, macroeconomic tensions in China and sparse signs of recovery in the US”. All brands will have felt these headwinds.

Nevertheless, is it worth underlining that 9% is double the growth in other, non-luxury, categories? I think it is.?

But within a ‘new luxury normal’, “it will be crucial for brands to take bold decisions on behalf of their customers,” says Bain’s Claudia D’Arpizio. “This is a defining moment for brands, and the winners will separate themselves through resilience, relevance, and renewal — the basics of the new value-centred luxury equation”.?

When it comes to Burberry, ‘resilience, relevance and renewal’ is at the heart of the brand's strategy of elevation and Britishness. Sales of its core brand icon, the trenchcoat, are going strong. The forecast that has had all of the pundits a-flutter comes after creative wunderkind Daniel Lee’s bold new brand vision has only had a single season in store. When reimagining a brand, particularly one as storied and with as much headroom as Burberry, it is a long-game. Lee has taken those ‘bold decisions’ for Burberry’s customers. The markets must give Burberry time: true luxury cannot be built overnight. ?

It is true the market is tighter. To succeed, luxury must double-down on doing what it does best: tantalising and enchanting its customers with a beautiful, distinctive offering, defined by exceptional quality.?

My prediction is that, far from a slowdown, 2024 will herald an explosion of creativity as the sector takes on the challenge of this new normal.

– Written by Helen Brocklebank